Yelp Revenue Up 66%, Propelled By Local Ad Biz

Yelp on
Tuesday reported a 66% increase in revenue to $76.4 million in the third quarter, fueled by its
local advertising business. The local ratings and reviews service posted a loss of $2.6 million, or four cents a share, compared to a loss of $4.8 million, or eights cents a year ago.

Wall
Street analysts, on average, had expected Yelp to report a loss of six cents on revenue of $75 million.

Yelp said active local business accounts in the quarter grew 65% year-over-year to
approximately 74,000. Meanwhile, average monthly visitors on the Web increased 30% year-over-year to about 132 million. Mobile traffic grew even faster, rising 52% from a year ago to 61 million
(including mobile Web and apps).

"We had a great start to the year and are excited about the large opportunity ahead of us," said Yelp CEO Jeremy Stoppelman in the earnings release.

He
highlighted partnerships the company forged in the quarter with Yahoo to power local search -- and with YP, to improve the quality of information seen on business listing pages and expand its
distribution within the YP Local Ad Network. Stifel Nicolaus analyst Michael Purcell estimated the latter deal could bring in $25 million to $50 million in added revenue in the coming years.

Yelp also continued to see steady mobile growth as more people shift to using its mobile site and smartphone apps. In addition to the mobile user base increasing 15% from 53 million in the prior
quarter, 35% of reviews posted to the site now coming from mobile devices.

Internationally, Yelp expanded its presence to Mexico and Japan, and added new markets in Quebec City, Canada and
Lisbon, Portugal, for a total of 120 cities covered by the service.

Looking ahead, the company projects revenue of $85 million to $86 million, representing growth of 55% from the same period a
year ago. Buoyed by current trends, Yelp also raised its outlook for the full year to revenue of $363 to $367 million, marking a 57% gain over 2013.